Utilization in public organizations: a case study of dawuro zone finance and economic development department
Budget utilization polices in Ethiopia local government organization
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- 2.8 Concepts of under and over utilization of Budget
| 2.7 Budget utilization polices in Ethiopia local government organization Implementation of the approved budget also known as budget execution covers not only measures for disbursing funds already allocated but also the monitoring of how funds are spent to ensure that they are used judiciously and for the intended purposes. It is the responsibility of ministry of finance and economic development to inform all government organization of their approved budget. It uses forms to notify each public body of their approved recurrent and capital budget respectively (MoFED, 2006). According to Geoge M. and Takawire M. (2008), the Local government is made up of two parts revenue and expenditure. The estimate of both of these parts are also divided into two, 46 that is the recurrent and capital expenditure components the recurrent expenditure component consists of the day-to-day running expenses such as water, electricity fuel, repair and maintenance, wage and Salaries. The capital expenditure component refers to expenses on project such as, clinics, schools, roads, and many other infrastructures development projects. 2.8 Concepts of under and over utilization of Budget (Allen and Tommasi, 2001), stated that over utilization are sometimes caused by non competence of budget managers with the spending limits defined in the budget, when committing expenditures. Since cash allocated to spending units for appropriated expenditures is generally controlled, these overruns generate spending arrears. Overruns are often the results of off-budget spending mechanisms payment from special accounts etc. In some countries, payment made through exceptional procedures are not controlled against the appropriations and are therefore an important cause of overruns lack of compliance can be addressed through strong thing the audit system, and reporting system, and ensuring the effectiveness of the basic budget execution control. Moreover runs can be caused by deficiencies in budget preparation. Sound budget preparation processes and adequate institutional arrangements are perquisite for avoiding overruns. On other hand, Allen and Tommasi (2001) expressed in number of countries, the official budget is under spent, particularly its non-wages expenditure item. This does not necessarily mean that there is good fiscal discipline in these countries. In some countries with poor governs under spending of the official budget may coexist with large amounts of off-budget spending. 47 On the whole, inmost cases, under utilization as well as over utilization is related to insufficiencies in budget preparation and program preparation. An overestimated budget and unrealistic projections of revenues may lead to budget revision during budget utilization and a practice known as repetitive budgeting. (Peters, 1998) identified the following weakness in resource allocation and use poor planning no link between policy making poor planning and budgeting poor expenditure control inadequate funding of operations and maintance; little relation between budget as formulated and budgeted as utilized inadequate accounting systems un rediability in the flow of budgeted funds to agencies and to lower level of government and poor cash management. Download 0.82 Mb. Share with your friends:
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